So Far, 5G Structural Separation Is Not Popular

Sometimes a single fixed network is all a country can reasonably afford to support, leading to regulatory policies formally based on a single infrastructure supplier and multiple retail providers. Sometimes it works better; possibly sometimes worse than allowing infrastructure competition. 

Malaysia's government 5G network--at least for the moment--seems an example of that. The biggest mobile service providers--Axiata Group, DiGi.com and Maxis--who prefer to build and operate their own networks, have not yet agreed to use the government’s network, though the network is preparing for launch in about a month.

At least up to this point, mobile networks have not been unaffordable in markets with competition. Indeed the top Malaysian carriers already had been making investments to support 5G. 

Among the stated worries are prices, the ability to innovate or differentiate, as well as transparency. Mexico pursued a similar single-5G network approach, but that failed because of mobile operator opposition. 

As more private equity and institutional investment funds ponder taking stakes in digital infrastructure assets--including access networks, data centers and fiber backbone assets--we will have to see where the operator comfort level lies. Few have fundamental qualms about divesting tower assets. 

The issue is how much broader involvement in entire core or access assets could occur. Traditionally, private equity investments  have been concentrated elsewhere, especially in real estate, energy assets, business services and software. But telecom infrastructure investments have been growing. 

That noted, the top-down government mandate approach to structural separation seems problematic. Malaysia and Mexico chose a govertnment-imposed structural separation model. 

The newer investment-sharing model relies on voluntary, market-based investment in core access or transport infrastructure, or telecom real estate. That can involve either purchase of minority stakes in whole businesses, or outright acquisition of whole businesses. 

There seems, as you might guess, less interest in structural separation than in co-investment; less interest in facilities-light operations than burden sharing of capital investment.